Prejudgment Interest on California Contract Claims (Civil Code 3287 and 3289)

Last updated: November 2026

Prejudgment interest compensates a California contract plaintiff for the time between breach and judgment. When damages are certain or can be calculated from the contract, interest runs as of right from the day the right to recover vested. When damages are unliquidated, the court may award interest in its discretion, but no earlier than the filing of the lawsuit. The rate is the contract rate or, if none, 10 percent a year. Kolmogorov Law, P.C. pursues and contests interest claims for businesses in Orange County, Los Angeles, and across California.

Call (909) 235-6116 or contact us online to discuss a contract claim where interest may be a large part of the recovery.

Why prejudgment interest in California matters more than clients expect

Business cases take time. A contract claim filed in Orange County or Los Angeles often reaches trial two years or more after the breach. At 10 percent simple interest, a claim that has aged three years is worth 30 percent more than its face value. On a six-figure receivable that is real money.

Interest is also one of the few parts of a damages award that does not depend on persuading a jury. If the claim qualifies, the court adds it. That is why the first question in a contract case is whether the damages are liquidated.

Liquidated claims: interest as a matter of right

A person entitled to recover damages that are certain, or capable of being made certain by calculation, and whose right to recover vested on a particular day, is entitled to interest from that day. (Civ. Code, § 3287, subd. (a).) The only exception is where the debtor was prevented by law or by the creditor's own act from paying.

Certain or capable of being made certain by calculation is the test. Unpaid invoices for a stated price qualify. So does an unpaid loan balance, a fixed fee, or a sum due under a settlement. The question is whether the defendant could have computed the amount owed from the contract and known facts, not whether the defendant disputes liability.

Claims become unliquidated when the amount depends on a judgment call. A dispute over the reasonable value of services with no agreed rate, or over how much of a shipment was defective, is not capable of calculation until a factfinder decides it. Lost profits are almost never liquidated.

The plaintiff with a liquidated claim should plead interest in the complaint, prove the vesting date at trial, and ask for the computation in the judgment. Our unpaid invoices page and promissory note page cover the two most common liquidated claims.

Unliquidated contract claims: discretionary interest from filing

For a contract cause of action where the claim was unliquidated, the person entitled to damages under the judgment may also recover interest from a date before judgment that the court fixes in its discretion. That date can be no earlier than the date the action was filed. (Civ. Code, § 3287, subd. (b).)

Two features matter. The award is discretionary. And the starting point is capped at the filing date, which means a plaintiff who waits two years to sue on an unliquidated claim forfeits two years of interest.

The request should be made by motion before entry of judgment, with a proposed computation. Courts regularly deny it when the plaintiff raises it for the first time after the judgment is signed.

The rate: the contract rate, or 10 percent

A legal rate of interest stipulated in the contract remains chargeable after a breach, as before, until the contract is superseded by a verdict or other new obligation. (Civ. Code, § 3289, subd. (a).) If a contract entered into after January 1, 1986 does not stipulate a rate, the obligation bears interest at 10 percent per year after a breach. (Civ. Code, § 3289, subd. (b).) The statute excludes a note secured by a deed of trust on real property from that default rule.

Prejudgment interest is simple, not compound, unless the contract provides otherwise. After judgment, interest accrues on the unpaid principal at 10 percent per year as a matter of statute (Code Civ. Proc., § 685.010, subd. (a)(1)), with lower rates for certain consumer and medical debts that rarely arise in business cases.

A contract rate below 10 percent binds the plaintiff; it cannot trade up to the statutory rate after a breach.

Interest in tort and fraud claims

Where the obligation does not arise from contract, or in any case of oppression, fraud, or malice, interest may be given in the discretion of the jury. (Civ. Code, § 3288.) Business plaintiffs who plead both breach of contract and fraud therefore have two routes to interest: as of right on a liquidated contract claim, and at the jury's discretion on the fraud claim. The two cannot be stacked on the same dollars.

How this comes up for business owners

A wholesaler sues a retailer on nine unpaid invoices totaling a fixed amount, each with a stated due date. The claim is liquidated. Interest runs at 10 percent from each due date, and after a two-year case it adds roughly a fifth to the judgment.

A design firm sues a client for the reasonable value of work performed without a signed rate agreement. The amount is for the jury. The firm can ask the court for discretionary interest, but only from the filing date, and only if it makes the motion before judgment.

A borrower defaults on a business loan at 8 percent. The lender gets 8 percent, not 10, through judgment, because the contract rate controls. (Civ. Code, § 3289, subd. (a).)

Interest also changes the arithmetic of settlement. A defendant evaluating a liquidated claim should add the accrued interest to the exposure, and a plaintiff should include it in any demand. A statutory offer to compromise can shift costs; our CCP 998 page explains how. Our contract damages page covers the principal categories interest attaches to.

What we do, and where these cases are heard

We identify at intake whether the claim is liquidated, plead interest accordingly, and prove the vesting dates at trial. On the defense side, we contest the characterization and the start date, which can cut an interest claim substantially. Cases are heard in the Orange County Superior Court's Central Justice Center in Santa Ana, the Los Angeles Superior Court's Stanley Mosk Courthouse, or the Central District of California where federal jurisdiction exists. Our breach of contract practice page describes the practice.

What to bring to the first meeting

Bring the contract and any interest or late-fee clause, the invoices or payment schedule with due dates, a ledger of payments received, and the date of the first missed payment or other breach.

Frequently asked questions

What is the prejudgment interest rate in California for breach of contract?

The contract rate, if the contract stipulates one, continues to run after breach until judgment. (Civ. Code, § 3289, subd. (a).) If the contract is silent and was made after January 1, 1986, the rate is 10 percent per year from the breach. (Civ. Code, § 3289, subd. (b).) Interest is simple unless the contract says otherwise.

When does prejudgment interest start in California?

For damages that are certain or calculable, interest runs from the day the right to recover vested, usually the breach or due date. (Civ. Code, § 3287, subd. (a).) For unliquidated contract claims, the court may award interest from a date it chooses, but not earlier than the filing of the lawsuit. (Civ. Code, § 3287, subd. (b).)

What does "capable of being made certain by calculation" mean?

It means the defendant could have figured out the amount owed from the contract terms and known facts without waiting for a factfinder. A fixed price, a loan balance, or a stated fee qualifies. A dispute over reasonable value, the extent of defective work, or lost profits usually does not. A defendant's denial of liability does not make a fixed amount uncertain.

Is prejudgment interest automatic?

On a liquidated claim, yes, once the plaintiff proves the amount and the vesting date; the statute says the plaintiff "is entitled" to it. (Civ. Code, § 3287, subd. (a).) On an unliquidated contract claim, no; the court decides in its discretion, and the plaintiff must ask before judgment is entered. Plead it in the complaint either way.

Can I get interest on a fraud claim?

Yes, but at the jury's discretion. In actions not arising from contract, and in every case of oppression, fraud, or malice, interest may be given in the discretion of the jury. (Civ. Code, § 3288.) If you also have a liquidated contract claim on the same loss, you cannot recover interest twice on the same dollars.

Talk to a California breach of contract attorney

If your business is owed money under a contract, or is defending a claim where interest is at stake, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and represents businesses in Orange County, Los Angeles, and throughout California.

This page provides general information about California law and is not legal advice. Outcomes depend on the contract, the facts, and the court.